Hello guys today I come with a very important topic and that many neglect it either by lack of knowledge of the issue or simply not enough means to have one!
Everyone always asks me if I really need a lawyer for my online business or not. Just recently, a friend asked me about San Diego Lawyers. The answer is mixed; no and yes. Let me explain; you can go online and see if you can find something that applies to your situation. In this case, no need for a lawyer. But the real question every entrepreneur has to ask is why would I need a lawyer?
Well, you need a lawyer because lawyers are professionals and each one is good at what they do. They do this for a living so it will take much less time to answer a legal question than it does for us.
Now if you are a genius and you want to be everywhere and you have the time then you might as well teach yourself how to be a lawyer, you can go to the law library and read the books and articles and attend more advanced modules and then specialize…
So when someone says well do I need a lawyer to set up such and such a procedure for my business I tell them yes I will direct you to X or Y site get out your credit card and do it right. Sure you’ll pay money, but in the long run you’re a big winner but beware, you could do it by yourself, but certainly not like a Pro!
There are many ways to make mistakes when you are not familiar with a legal issue. One of the big issues for businesses is the tax issue which is usually the second or third step when we set up a business if you set it up and do nothing, that’s the default but there are a few other options so the three options are that we can do a default tax which means if you’re a single member, it’s a single owner tax.
If it’s multi-member, you’re going to be a partnership under the internal revenue code and what that really means is that it’s just going straight to your personal tax return, so if for example my partner and I if this business was taxed as a partnership, at the end of the year, it would generate a tax return called form 1065 and it would show our respective percentages, it would show how a lot of the profits or losses that the business had, then it would basically say to the IRS, you can expect to see that percentage on both myself and my partner’s tax return.
Partnership can be a second option if you are eligible now, not all businesses are eligible.
We will go over the LLCs we are discussing today the top 5 write-offs for LLCS . There could be a number of reasons why you decided to create an LLC maybe you are a new business owner maybe you just started earning 2099 income and someone told you that you needed some type of entity structure maybe you are a truck driver maybe you even want to invest in a rental property and you want to get an LLC for asset protection….
If this is your case, we’re just going to go over the top five tax strategies for LLCS to put you in a better position,
Table of Contents
Number one,
Start a cost of organization as a new business owner there is a good chance you will have startup costs and organization costs startup costs and organization costs can be in the form of marketing ads for example.
Maybe you’ve already created your website or maybe you’ve spent money on training and coaching before you decided to start up any time you have costs before you’re considered operational they are considered start up costs and operating costs and you as a business owner can take five thousand dollars in the first year as a start up cost or organization cost, let’s just say you spend more than five thousand dollars when starting your business. Any expense over five thousand dollars is amortized over 180 months. Keep this in mind when filing your taxes, make sure you include all your start-up costs and all your organization costs for your basic small business.
Number two,
The home office deduction in 2020 and 2021, we have been facing a pandemic – The covid19 – if you are reading this article right now, chances are you have experienced it, so let’s talk a little bit more about the tax deductions you can get as a business owner, one of the biggest tax deductions is the home office deduction most small business owners work from home, so how do we go about taking this home office deduction, it’s simple if you have a designated space in your home or a designated room in your home that you conduct your business in that is strictly for your business, you can take that space and take advantage of that space as a home office deduction.
How does it work?
Quite simply, you start by getting the square footage of your home office space or your home office once you have that square footage you will divide your home office space or your home office, the total square footage of your entire home when you do this calculation, you are going to receive a percentage this percentage will be your home office percentage based on that utilities may include your water usage, electricity and gas fill all of these go into your home office ex expenses whenever you do repairs or maintenance or make improvements to your home office, these may also decrease as part of your home office expenses.
Number three,
The vehicle deduction as a business owner you might be traveling to meet with your clients and it is likely that your vehicle will be used for your business how are we going to make sure that this vehicle that is used for your business to be operated in the right way, there are two different ways to decide to take a vehicle deduction within your LLC. take 58 cents for each mile driven for many truckers and truck drivers, mileage is extremely important because they track their mileage on various different applications.
Do as they do, it remains a way for you to track your mileage on your cell phone and be able to track every distance you drive; this is important so you get all your deductions just think about it 58 cents for every mile you drive that can add up extremely quickly the second way a business owner can get a vehicle deduction is to depreciate their vehicle within their business a vehicle depreciates over a five year period if you buy a vehicle at 50 000 a depreciation of ten thousand dollars each year if you were to take a straight line depreciation there are different methods to depreciate a car you can choose to use a declining balance method which allows you to accelerate part of your depreciation so you get a larger depreciation with your vehicle instead of waiting the full five years to take all 50 000.
Number four,
There is also a section of the law that allows you to take a business deduction for a vehicle that weighs more than 6,000 pounds in one year, so if you buy a vehicle that weighs more than 6,000 pounds, you can take the entire vehicle out of your business through your LLC in the same year and reduce your taxes immediately.
Speaking of marketing and advertising
No business works without attracting customers, whether you are selling services or providing products, you are going to need to market those services for those products and you are going to need to advertise them; marketing and advertising are two of the most important expenses of most business owners because this is how you can create consistent revenue within your organization.
Marketing and advertising is a business expense that you must take every year through your LLC when you spend money on marketing and advertising these are immediate expenses these expenses should not be amortized over time or depreciated over time, so rather than having to look at marketing and advertising as an expense as a five year vehicle, you can amortize your marketing and advertising exactly the same in the year you spend the money on your marketing and advertising as long as it is not considered an organization or start-up cost, you will have no problem spending one hundred percent of your marketing and advertising through your LLC.
Number five ,
Turning your LLC into a corporation s when your business grows to the point where the benefits outweigh the cost of turning your LLC into an escort, you will eliminate a 15.3 self-employment tax that many LLCs and sole proprietors pay, not to mention that you will be able to take a deduction when you decide to go on the payroll because an s corporation requires the business owner to pay themselves out of their business this is one of the many advantages of being a business owner being able to control the income you pay yourself and control the amount of income your tax gap one of the many advantages of being in an LLC is that you can choose to tax yourself as an LLC you can choose to tax yourself as an s corporation or you can choose to tax yourself as an ac corporation, but one of the advantages of taxing yourself as an s corporation is that it eliminates the self-employment tax and you can take a tax deduction on your salary as a shareholder.
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